Supreme Court Dismisses Centre's Plea Alleging Bias Against Foreign Arbitrators In Reliance Industries Arbitration

The Supreme Court bench comprising Chief Justice DY Chandrachud and Justice PS Narasimha dismissed the central government's appeal which had sought to cease arbitration proceedings initiated by Reliance industries, BP Exploration, and Niko Resources against the Ministry of Petroleum and Natural Gas. The arbitration proceedings were initiated over a $400-million cost recovery dispute involving natural gas exploration in the KG-D6 block.

Earlier, the central government had approached the Delhi High Court requesting it to halt the arbitration proceedings. However, when the Delhi High Court refused to do so, an appeal was filed in the Supreme Court. The counsel appearing for the Centre, Senior Advocate AK Ganguli stated that the government had "lost faith" in the two arbitrators– Michael D Kirby and Bernard Rix owing to alleged bias. The third arbitrator in the matter is the former Chief Justice of India VN Khare. He stated that there was an evident bias and there existed justifiable doubts regarding the independence and impartiality of the two foreign arbitrators. In order to establish the said bias, Senior Advocate Ganguli pointed out various procedural orders passed by the arbitral tribunal and stated that no arbitrator could decide allegations against himself and the same could only be done by the court.

Opposing Centre, Senior Advocate Harish Salve, appearing for Reliance Industries, stated that the argument raised by Senior Advocate Ganguli was nothing but "delaying tactics" by the government to stall the international arbitration. 

The bench did not seem convinced with the arguments raised by the Centre. CJI DY Chandrachud remarked – 

"It is not bias, unless you show some element of motivated error."

Accordingly the matter was dismissed. 

Earlier, Senior Advocate Harish Salve had argued before the Apex Court that there had been an unnecessary delay in the commencement of the international arbitration, even though the two foreign arbitrators were present in India. He had stated that the Centre's application seeking the termination of the panel of arbitrators on the ground of bias was dismissed by the Delhi High Court; yet the proceedings had not been commenced on the ground that the Centre was seeking to challenge the High Court's order. When Senior Advocate AK Ganguli asked if "heavens will fall" if the proceedings are deferred till the SLP is decided, CJI DY Chandrachud had said–

"Heavens will fall! On the one hand, we are crying hoarse that we want to encourage foreign investment, encourage business. And is this the kind of business friendly environment that you want to create? A three member international arbitration tribunal is waiting."

Case Title : Union of india vs Reliance Industries Ltd SPECIAL LEAVE PETITION (CIVIL) Diary No(s).40985/2022

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